Business during a Recession: Problems equal Opportunities
by Darren Chertkow
In the face of adverse economic conditions, many companies are tightening their belts. Almost inevitably, expansion plans are shelved, marketing expenditures are cut back and labour shed.
But for some canny businesses, these times of cost cutting may well be the start of their most profitable.
During a recession, many companies cut their marketing budgets, resulting in fewer advertisements, fewer promotional campaigns, fewer newsletters, and fewer sales visits.
But cutting back also means fewer competitors are as active in the marketplace, making it easier for your efforts to cut through your competitors’ clutter and reach your target audiences.
For many companies, an active approach to recessionary conditions right from the start can unlock business development opportunities that would not have been available to them before.
So while other companies hesitate and wait for signs the economy is improving, your company can be one of the few that moves the market ahead by seeking and seizing the inherent market opportunities.
These opportunities can be found all around. Remember, for every action there is a reaction. So:
* Look for emerging opportunities: What problems are companies in your market facing? What do those changes and challenges mean for your prospects? By exploiting market vulnerabilities, you have the opportunity to further bolster your market strength.
* Customise your services: It is important now to identify and advertise something your customer base actually wants, and to offer them a solution to suit their needs.
* Make better use of your sales force: Despite the downturn, clients demand greater levels of service and better business solutions that can only be provided by a well-educated sales-force with constant access to company and industry information.
* Create a strong first impression: When meeting with prospective clients for the first time, ensure you have a striking presentation at your disposal – this is your first opportunity to differentiate yourself from your competition. A strong first impression coupled with exemplary levels of customer service is the first step to building those pivotal customer relationships.
* Don’t lose site of what you already have: Traditional sales theory proposes that once you have an established relationship with a client, it is easier to cultivate ongoing business despite difficult times. It is imperative that these relationships are not neglected, so always ensure that you manage and optimise your relationships with existing clients. Try not to value your clients on a short-term basis, rather look to the future and build your relationship around a lifetime of business. Remember it costs up to 40 times more to gain a new customer than to keep an old one.
* 80/20 Principle: This principle states that 80% of your business will generally come from 20% of your clients. It is apparent that a greater amount of time and money must be spent looking after this top 20% – even if it is to the detriment of the bottom 80%. Companies should thus rather focus their limited budget on more profitable areas than taking a shotgun approach on everyone.
The same principle holds true for the different products and services offered by an organisation. It is vital to quantify the costs associated with, and the profitability of all products / services individually, in order to seek out the most and the least profitable.
Forge partnerships and co-marketing opportunities: Look at joint ventures, mergers and acquisitions. Consider how you can gain the market share of competitors who are hesitating in the market or who have fully withdrawn their marketing for the time being.
Remember, during tough economic times, it is important to revisit the tools used to attract and retain customers. Systematic investment in your brand during a recession can be extremely powerful when the economy snaps out of it, and can ultimately widen your lead over your competition.
Darren Chertkow is General Manager of Graphic Image Technologies, a media focused company operating in the digital video, advanced web and multimedia environment. He can be contacted on (+27-11) 880-2168.